Latest 3G/4G offer to help Airtel up data ARPU, customer stickiness

ET Intelligence Group: ﻿The sluggishness in data demand during the June 2016 quarter and the impending launch of services by Reliance Jio are prompting telecom operators to be more proactive in retaining customers.

On Monday, Bharti Airtel announced a new scheme wherein its prepaid customers can use one gigabyte of data on the company's 3G or 4G networks for 28 days by paying Rs 1,498 upfront. Once exhausted, users can renew the data pack by paying just Rs 51 as many times as required, for up to a year.

Through this scheme, the country's largest telecom company by revenue and subscriber base appears to be trying to increase customer stickiness. The entry of Reliance Jio later this fiscal could kindle a fresh bout of tariff war in data-based services, though.

According to industry trackers, Airtel's latest scheme may not put much strain on its data realisation. On the other hand, will help in tying up the average data revenue per user per month (data ARPU) at around Rs 180, depending on how often users refreshed the data limit. This is about 12% lower than its June quarter data ARPU of Rs 202.

In the short to medium term, such tactics may help telecom operators in retaining customers to some extent, but at the expense of the ability to improve realisation.In addition, operators may find it difficult to introduce tariff increases without sacrificing data usage.

For instance, Idea Cellular, the second largest listed telecom com pany, had stopped giving promotional freebies along with data plans two quarters ago. Though this improved its data realisation, the minutes of usage dropped reflecting the intensity of competition. To check further fall in usage, Idea plans to realign tariffs with that of the competition.

Over the past four quarters, Bharti Airtel's data ARPU has remained range bound between Rs 193 and 202 whereas data usage per customer increased significantly year-on-year by 28% to 904 megabytes (MBs) in the June 2016 quarter. Data realisation per MB, however, fell 13% during the period.

Bhar ti's latest data plan launched on Monday is a step to ensure that the trend in data usage continues despite competitive pressure. It is targeted at prepaid users, who constitute 94% of the company's customer base.

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